Legislature(2017 - 2018)GRUENBERG 120

04/17/2017 01:00 PM JUDICIARY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 4:30 PM --
Moved SB 100 Out of Committee
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 1(JUD) Out of Committee
        SB 100-MUNICIPAL LIENS: AUTHORITY FOR & PRIORITY                                                                    
1:04:14 PM                                                                                                                    
CHAIR CLAMAN announced that the  first order of business would be                                                               
SENATE BILL NO. 100, "An Act relating to municipal liens."                                                                      
1:04:46 PM                                                                                                                    
SENATOR DENNIS EGAN, Alaska State  Legislature, explained that he                                                               
was asked by city attorneys  throughout the state to introduce SB                                                               
100 because it fixes an  unintended consequence of a "really good                                                               
1998 bill"  wherein Senator  Tim Kelley  had stopped  people from                                                               
using bogus liens  to go after elected officials and  judges.  At                                                               
that  time,  he  explained,  no  one  realized  it  also  stopped                                                               
municipalities from  using liens to collect  against debts people                                                               
owed the city.  Not tax  liens, he pointed out, because those are                                                               
covered elsewhere in  statute.  Senator Egan offered  that when a                                                               
city  runs a  utility or  must  abate a  hazard, it  may need  to                                                               
record a  lien.  Importantly, he  noted, these liens do  not jump                                                               
the  line  because,  unlike  tax  liens that  move  in  front  of                                                               
everyone else, these  liens get in line by date  only, similar to                                                               
a private business.  Senate Bill  100 puts the tool back into the                                                               
municipalities'  hands and  gives liens  under municipal  law the                                                               
same authority as state and federal law.                                                                                        
1:06:35 PM                                                                                                                    
JESSE   KIEHL,  Staff,   Senator   Dennis   Egan,  Alaska   State                                                               
Legislature,   referred  to   the  detailed   sectional  analysis                                                               
contained in the committee packets,  and advised he was available                                                               
to take any detailed questions.                                                                                                 
REPRESENTATIVE MILLETT  referred to Sec. 3,  [AS 29.35.010], page                                                               
[2], lines 27-28, which read as follows:                                                                                        
          (4) to require periodic and special reports                                                                           
      from a municipal department to be submitted through                                                                       
     the mayor;                                                                                                                 
REPRESENTATIVE  MILLETT surmised  that  the  language required  a                                                               
municipality to put some type of  policy in place before the lien                                                               
takes place.                                                                                                                    
MR.  KIEHL answered  in the  affirmative and  explained that  the                                                               
municipality  must  act  by  ordinance;  therefore,  full  public                                                               
process comes  first.  Once that  policy was in place,  if a debt                                                               
needed to  be secured, it would  be available but not  before the                                                               
policy was  in place.   The bill does  not have a  retroactive or                                                               
retrospective effect, it is strictly going forward, he noted.                                                                   
1:07:59 PM                                                                                                                    
REPRESENTATIVE EASTMAN referred to page  4, [lines 2-10], and the                                                               
different  types  of  liens.     He  paraphrased  line  1,  "this                                                           
paragraph has  priority over  all other  liens except"  and asked                                                           
why  this  language chosen  because  earlier  [Senator Egan]  had                                                               
advised that these  liens are not placed in front  of other liens                                                               
and are in line according to date.                                                                                              
MR. KIEHL responded  that this priority language  was copied from                                                               
elsewhere in  the state's  lien statute and  that there  are many                                                               
different flavors of lien in  statute.  When working through this                                                               
logic chain,  the result  is what  Senator Egan  described, these                                                               
liens are in line on equal terms  with everyone else.  He said he                                                               
could  walk through  that  in a  couple of  pieces,  but this  is                                                               
existing statute language  that has that effect,  it places these                                                               
liens basically  in front  of everything that  isn't in  front of                                                               
these liens.   It is  interesting language,  but that is  its net                                                               
effect, he remarked.                                                                                                            
1:09:50 PM                                                                                                                    
REPRESENTATIVE  EASTMAN   asked  the  sponsor's   thoughts  about                                                               
including  a proviso  in the  language on  page 3,  wherein under                                                               
this bill, if the state  does give municipalities the opportunity                                                               
to  have  liens, that  there  be  required  "a sort  of  opt-out"                                                               
[provision].  For example, an  Alaska resident preferring to rely                                                               
entirely on clean energy or  sustainable power could opt-out of a                                                               
particular utility.  In that  manner, he said, the resident would                                                               
not use that utility  and would not run the risk  of a lien being                                                               
placed on their  property for not paying for a  utility they were                                                               
not using.                                                                                                                      
MR.  KIEHL  answered  that  the bill  is  fundamentally  a  local                                                               
control bill, and the question  of whether any given municipality                                                               
has mandatory use of its  utilities, assuming a municipality runs                                                               
the  utilities,   is  actually  an   issue  best  left   to  that                                                               
municipality   and   its   voters   to   decide.      Home   rule                                                               
municipalities, he  explained, under  its home rule  powers could                                                               
require  hook-up to  a utility.   Currently,  there is  a statute                                                               
elsewhere allowing  t any municipality to  have mandatory garbage                                                               
service,  not  all  municipalities   use  that  option  which  is                                                               
something  between  those  municipalities  and  their  voters  to                                                               
determine on a local level.                                                                                                     
1:11:36 PM                                                                                                                    
CHAIR CLAMAN opened public testimony on SB 100.                                                                                 
1:12:06 PM                                                                                                                    
AMY  MEAD,  Municipal  Attorney,  City  and  Borough  of  Juneau,                                                               
offered  an  example  of  why   this  bill  would  be  useful  to                                                               
municipalities, such  that, in 2012,  a large  historic structure                                                               
burned  in downtown  Juneau.    Within a  few  days the  building                                                               
official declared  the building a  public nuisance and  issued an                                                               
order requiring  the property owners to  perform certain repairs.                                                               
The property owners failed to  comply, the building sat for three                                                               
years, and  a second fire occurred  in March 2015.   The City and                                                               
Borough  of  Juneau (CBJ)  official  who  inspected the  building                                                               
found that the  property had significantly deteriorated.   In May                                                               
2015, he declared  the building had deteriorated to  the point it                                                               
was a public hazard and needed  to it be demolished, and required                                                               
that the  property owners demolish  the building.   Consequently,                                                               
she explained,  the property  owners failed  to comply  with that                                                               
order and the CBJ demolished the  building at a cost of over $1.6                                                               
million.   She pointed  out that the  CBJ had  previously adopted                                                               
the   International   Property   Management   Code   allowing   a                                                               
municipality to abate  a public nuisance at  the owners' expense.                                                               
Unfortunately,  due  to current  state  law,  the CBJ  could  not                                                               
secure that  debt with a  lien, meaning that a  prospective buyer                                                               
of  that now  flat  piece  of buildable  property  would have  no                                                               
notice  of  the debt  the  CBJ  incurred  in abating  the  public                                                               
nuisance  despite the  fact it  was a  legally permissible  debt.                                                               
Ms. Mead described  that similar to a  municipality that provides                                                               
for  utility  services,  the  CBJ   had  no  way  of  using  that                                                               
placeholder to secure its place in  line if that property were to                                                               
be sold.   Consequently, the  CBJ had to  file a lawsuit  for the                                                               
right to  recover those  funds, and  this legislation  would have                                                               
provided  an avenue  for  the CBJ  to secure  its  right in  line                                                               
should the  property have  been sold.   Ms.  Mead advised  that a                                                               
municipality  is not  allowed to  immediately  foreclose on  that                                                               
debt so  the property owner  would still have another  process to                                                               
object to  the foreclosure,  and object to  the placement  of the                                                               
1:14:35 PM                                                                                                                    
REPRESENTATIVE MILLETT surmised that  the demolished property was                                                               
still being held by the private  owner of the building, and asked                                                               
why there  was a legal avenue  for the CBJ to  force the property                                                               
owner to  sell the property  allowing the CBJ to  receive payment                                                               
of the debt.                                                                                                                    
MS.  MEAD responded  that  the  CBJ initiated  a  lis pendens,  a                                                               
notice of  the lawsuit, to  recover those costs because  it could                                                               
not  file a  lien.    Subsequent to  the  CBJ  recording the  lis                                                               
pendens, there was an objection  to that recording, and the court                                                               
ordered the CBJ  to withdraw the lis pendens.   Consequently, she                                                               
advised, in the event the property  owner decided today to try to                                                               
sell that  property there would be  no manner in which  the title                                                               
search would uncover the [$1.6  million] debt.  She remarked that                                                               
the CBJ  has been  engaged in  that lawsuit for  one year  and it                                                               
would  probably be  close to  another  year before  the case  was                                                               
resolved and  hopefully, she expressed,  the CBJ  will ultimately                                                               
recover  that debt.   Initially  and  ironically, the  defendants                                                               
filed  a Motion  to Dismiss  arguing that  the CBJ  should simply                                                               
file  a lien  to secure  the  debt, and  of course,  the CBJ  was                                                               
prohibited  to  filing a  lien  due  to  current state  law,  she                                                               
pointed out.                                                                                                                    
1:16:04 PM                                                                                                                    
REPRESENTATIVE LEDOUX  asked upon what grounds  the court ordered                                                               
the CBJ to withdraw the lis pendens.                                                                                            
MS. MEAD responded  that the court ordered that the  title to the                                                               
property was  not at issue and  not at stake; therefore,  the lis                                                               
pendens was not an appropriate mechanism.                                                                                       
1:16:58 PM                                                                                                                    
WILLIAM   D.   FALSEY,   Municipal  Attorney,   Municipality   of                                                               
Anchorage, advised that during  the Anchorage Assembly's official                                                               
legislative program [meeting]  a priority items was  the issue of                                                               
changes  to  state  law state  law  restoring  the  traditionally                                                               
understood  ability  of  municipalities   to  protect  their  law                                                               
abiding citizens  and taxpayers by  recording liens.   He offered                                                               
that SB  100 would accomplish  that goal and the  Municipality of                                                               
Anchorage transmitted letters  of support.  He  explained that in                                                               
some  ways this  is a  clean-up  measure designed  to address  an                                                               
overdue  maintenance  and  plumbing  problem with  the  way  "our                                                               
government is structured"  that is coming out  of a well-intended                                                               
fix to an entirely different problem  in the 1990s.  He explained                                                               
that Anchorage had  an instance of several  citizens not entirely                                                               
happy  with  its  public officials  filing  liens  against  their                                                               
personal property  "so something  like 43  liens have  been filed                                                               
against  the  mayor  and  every  Anch  --  every  member  of  the                                                               
Anchorage Assembly."   To its  credit, the  legislature corrected                                                               
that problem but  did so in a manner that  swept up the municipal                                                               
liens  within its  ambit.   Moving  forward to  2012, the  Alaska                                                               
Supreme Court found that another  jurisdiction could not record a                                                               
lien to secure its unpaid utility  bills.  He added that it would                                                               
be   somewhat   surprising   for   the   legislature   to   leave                                                               
municipalities  out of  the lien  framework  because in  thumbing                                                               
through Title 34.35,  the legislature had authorize  a whole bevy                                                               
of liens to be filed by  a whole variety of characters including,                                                               
mechanics, those  who are  performing services  on mines  and oil                                                               
wells,  common   carriers,  folks  performing   private  property                                                               
storage,   cattle  grazers,   fish   packers,  fish   processors,                                                               
fishermen,  attorneys, hospitals,  physicians and  nurses, hotels                                                               
and boarding  rooms, lumberjacks  and those  who work  with other                                                               
timber operations, common labors of  all stripes for their wages,                                                               
and even night watchman.                                                                                                        
1:19:30 PM                                                                                                                    
CHAIR  CLAMAN,  after  ascertaining  no one  wished  to  testify,                                                               
closed public testimony on SB 100.                                                                                              
1:19:59 PM                                                                                                                    
VICE  CHAIR  FANSLER  thanked  Senator  Egan  for  bringing  this                                                               
legislation forward  because it cleans  up an issue  that offered                                                               
true    unintended   consequences    and    hurt   the    state's                                                               
municipalities.    He  commented that  anything  the  legislature                                                               
could to do  help municipalities help themselves is  a good thing                                                               
and  this bill  squarely  accomplishes  that goal.    He said  he                                                               
supports SB 100.                                                                                                                
1:20:26 PM                                                                                                                    
REPRESENTATIVE  EASTMAN  commented that  he  would  like time  to                                                               
draft  an amendment  related to  his  earlier, opt-out  provision                                                               
before placing  a lien  on someone's  property, suggestion.   The                                                               
sponsor statement  specifically referred to  municipalities using                                                               
a means to  collect from people who use services  but do not pay,                                                               
which is fair.  His concern,  he said, is that municipalities may                                                               
use  this to  force  people to  pay and  possibly  give up  their                                                               
property for services the people never intended to use.                                                                         
CHAIR  CLAMAN  pointed out  to  Representative  Eastman that  his                                                               
office had  forwarded a  notice on  Saturday that  amendments for                                                               
this bill  were due at  10:00 this morning.   While, he  said, he                                                               
appreciates Representative Eastman's interest,  he would not hold                                                               
the bill another day to take amendments.                                                                                        
1:21:30 PM                                                                                                                    
REPRESENTATIVE   LEDOUX   remarked   she   did   not   understand                                                               
Representative Eastman's request because,  what person would opt-                                                               
in  to a  lien.   In the  event a  person was  faced with  a lien                                                               
because they  failed to pay  for something, they would  not agree                                                               
to a lien being issued on their property.                                                                                       
REPRESENTATIVE EASTMAN explained that  currently, a person has an                                                               
opportunity to  use utility services from  a municipality, except                                                               
not everyone  uses sewage services and  in some places it  is not                                                               
even  an option.    The opt-out  provision,  he explained,  would                                                               
allow Alaskans not using and never  plan to use, a way to prevent                                                               
a lien being placed on their  property for utilities they are not                                                               
using.   He noted this  was the  first committee hearing  on this                                                               
bill and there hadn't been  an opportunity for discussion on this                                                               
1:23:14 PM                                                                                                                    
CHAIR CLAMAN surmised that Representative Eastman's concern was                                                                 
to prevent  a lien being  put on  their property for  utilities a                                                               
person didn't use,  similar to a mechanic's lien  or timber lien,                                                               
except a  utility would not  issue a lien  if the person  did not                                                               
actually use  the utility.   Therefore, he  said, if  the utility                                                               
delivered electricity  for two months  and a person  advised they                                                               
did not want to use the  electricity any longer and would not pay                                                               
for the  past two months,  that instance would be  appropriate to                                                               
issue a lien to collect the two months of provided electricity.                                                                 
1:24:06 PM                                                                                                                    
REPRESENTATIVE  FANSLER  moved  to  report SB  100,  Version  30-                                                               
LS0709\J, out  of committee  with individual  recommendations and                                                               
the accompanying zero fiscal note.                                                                                              
REPRESENTATIVE EASTMAN objected.                                                                                                
A  roll call  vote  was taken.   Representatives  Kreiss-Tomkins,                                                               
LeDoux,  Fansler,  Millett, and  Claman  voted  in favor  of  the                                                               
passage  of SB  100.   Representative Eastman  voted against  it.                                                               
Therefore,  SB  100  was  reported out  of  the  House  Judiciary                                                               
Standing Committee by a vote of 5-1.                                                                                            

Document Name Date/Time Subjects
SB100 ver A 4.17.17.PDF HJUD 4/17/2017 1:00:00 PM
SB 100
SB100 Sponsor Statement 4.17.17.pdf HJUD 4/17/2017 1:00:00 PM
SB 100
SB100 Sectional Analysis ver A 4.17.17.pdf HJUD 4/17/2017 1:00:00 PM
SB 100
SB100 Supporting Document-Letters and Resolutions 4.17.17.pdf HJUD 4/17/2017 1:00:00 PM
SB 100
SB100 Additional Document-Benintendi Legislative History 4.17.17.pdf HJUD 4/17/2017 1:00:00 PM
SB 100
SB100 Fiscal Note CCED-DCRA 4.17.17.pdf HJUD 4/17/2017 1:00:00 PM
SB 100
HB001 ver U 4.14.17.pdf HJUD 4/14/2017 1:00:00 PM
HJUD 4/17/2017 1:00:00 PM
HB 1
HB001 Sponsor Statement 4.14.17.pdf HJUD 4/14/2017 1:00:00 PM
HJUD 4/17/2017 1:00:00 PM
HB 1
HB001 Memo of Changes 4.14.17.pdf HJUD 4/14/2017 1:00:00 PM
HJUD 4/17/2017 1:00:00 PM
HB 1
HB001 Supporting Document-PEW Report 4.14.17.pdf HJUD 4/14/2017 1:00:00 PM
HJUD 4/17/2017 1:00:00 PM
HB 1
HB001 Supporting Document-Voting Information and Statistics 4.14.17.pdf HJUD 4/14/2017 1:00:00 PM
HJUD 4/17/2017 1:00:00 PM
HB 1
HB001 Supporting Document-Letters of Support 4.14.17.pdf HJUD 4/14/2017 1:00:00 PM
HJUD 4/17/2017 1:00:00 PM
HB 1
HB001 Supporting Document-Letter Alaska Community Action on Toxics 4.14.17.pdf HJUD 4/14/2017 1:00:00 PM
HJUD 4/17/2017 1:00:00 PM
HB 1
HB001 Amendment #1 4.17.17.pdf HJUD 4/17/2017 1:00:00 PM
HB 1
HB001 Fiscal Note OOG-DOE 4.17.17.pdf HJUD 4/17/2017 1:00:00 PM
HB 1
HB001 Additional Document-Division of Elections Reply to House Judiciary Committee Questions 4.21.17.pdf HJUD 4/17/2017 1:00:00 PM
HB 1